Talking Points – AUD/USD, EUR/AUD, AUD/JPY, Double Top
- AUD/USD made upside progress, GBP/AUD declined after support breach as expected
- EUR/AUD may be in for losses in the week ahead after a couple of bearish price signals
- AUD/JPY & AUD/USD still confined by trend-defining resistance lines, outlooks neutral
AUD/USD Technical Outlook: Neutral
Previously, the Australian Dollar set itself up for a push higher against the US Dollar and while that may have turned out to be true this past week, more progress needs to be done in order to overturn the dominant downtrend. The Aussie Dollar also gained against the British Pound following a descent through a rising range of support from August.
AUD/USD ascended through the December/May 2016 lows on the daily chart below, clocking in its best performance in a single day since March 15th, 2017. Its attempt to push through the falling trend line from February afterwards however failed. While its performance last week could be seen a bullish for near-term price action, I would like to see a rise above the trend-defining descending resistance line to argue that the pair is heading for a lasting reversal.
Doing so would expose horizontal resistance around 0.73106 which is the July low/September high. Getting above that then exposes a falling trend line which is formed by connecting the July/August highs. Meanwhile, near-term support is around 0.71452. A descent through that opens the door to testing the current 2018 low. With that in mind, the AUD/USD technical outlook will be neutral.
AUD/USD Daily Chart
EUR/AUD Technical Outlook: Bearish
Against the Euro, the Australian Dollar may have more room for gains in the week ahead. We do have a couple of prominent bearish signals in EUR/AUD. The first one is a double top formation and prices have now descended through support (1.59855), exposing the target of the pattern around 1.56071. This is done by taking the difference between the peak of the pattern (1.63544) and the trough (1.59855).
Second, we had a descent through a rising trend line from June as the dominant uptrend was overturned. Should EUR/AUD fall through support, the next target would be the June 4th low at 1.52755. Taking this into account, the EUR/AUD technical outlook will have to be bearish. Follow me on twitter @ddubrovskyFX for updates on these charts and my views.
EUR/AUD Daily Chart
AUD/JPY Technical Outlook: Neutral
Lastly, AUD/JPY is in a very similar situation as AUD/USD. After rising above horizontal resistance at 80.50, the Australian Dollar struggled to make further progress against the Japanese Yen. The descending trend line from February held here as well, meaning that the dominant downtrend is still intact. Until we get a close above it with confirmation, the AUD/JPY technical outlook will have to be neutral.
AUD/JPY Daily Chart
** Charts created in TradingView
--- Written by Daniel Dubrovsky, Junior Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter